Press Release
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IFS releases first analysis of proposed
school funding reforms in England
IFS researchers have provided the first detailed assessment of the
Government’s ambitious plans to reform school funding in England – the
Government itself having failed to quantify the likely effects of the proposals
on which it has consulted.
The research shows that, after years of failure to develop and implement
rational reform, the current system continues to allocate money in ways
which mean that similar schools can receive very different amounts.
Inevitably reforms, including those proposed by the Government, would
involve significant disruption for schools, creating large numbers of financial
winners and losers. Even under a reform that sought to minimise the amount
of disruption, roughly one in six schools would see cuts in funding of 10% or
more compared with existing policy, while one in ten schools would see their
funding increase by 10% or more. Other key findings are that:
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Given the magnitude of the financial implications, any reform would
have to be introduced gradually over a long period of time. Transition
periods of less than a decade will involve significant, sustained losses
for some schools. For example, a transition period of six years would
require some schools to incur annual cash-terms losses in funding of
up to 5%.
The effects will be concentrated in particular local authorities. Under
potential reforms considered in the report, schools in Liverpool,
Wigan, Coventry, Wolverhampton and North East Lincolnshire would
be deemed significantly overfunded at present, and would therefore
see the largest losses, on average. Meanwhile, in Islington,
Derbyshire and Warwickshire, schools would be deemed
underfunded and thus benefit the most. On the surface, these local
authorities appear to share little in common, perhaps reflecting the
random nature of anomalies in the current funding system. In other
parts of the country, primary schools would see reductions in funding
but secondary schools would not, or vice versa; this would be an
inevitable consequence of restricting all local authorities to the same
relative generosity between primary school and secondary school
funding.
Given its inevitable impact on school funding levels, any national
funding formula must be designed extremely carefully. The proposals
set out in the Government’s most recent consultation would divert
funding from secondary to primary schools. If this is unintended, the
formula should be modified to recognise that current funding is
geared strongly towards secondary schools.
Under the current system, schools receive the bulk of their funding via local
authorities, which each set their own funding formula. The Department for
Education (DfE) proposes to simplify this by calculating each school’s funding
level centrally according to one formula. There would then be limits on the
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ability of local authorities to vary these amounts. Such a reform would
represent the largest change to the school funding system in over 20 years.
Today’s report examines specific options for this reform and their financial
implications. The analysis is based on DfE’s own data, yet no such analysis
was published by DfE in either of its consultations on school funding reform.
This report therefore provides the only in-depth assessment to date of the
proposed reforms to school funding.
Last year, most primary schools received between £3,000 and £6,000 per
pupil, while most secondary schools received between £4,000 and £7,000.
While most of this variation occurs because schools differ in their
characteristics, schools in similar circumstances can often receive different
levels of funding. This largely occurs because different local authorities take
into account different factors, and fund particular types of schools differently.
Schools’ and local authorities’ finances also depend on historical factors, such
as funding in previous years, making them less responsive to pupil needs.
In its most recent consultation on school funding (launched in July this year),
the Government set out proposals to replace the myriad and complex local
authority formulae with one centrally set national funding formula, leaving
local authorities with less discretion to vary funding around these levels.
Today’s report analyses specific options for a national funding formula and
demonstrates the financial implications for different schools and areas of the
country.
Luke Sibieta, Senior Research Economist at IFS and co-author of the report,
said:
“There is little doubt that the school funding system merits reform. An explicit
national formula offers significant advantages, including simplicity,
transparency and responsiveness of school funding. But change would also
bring costs and disruption with large losses for some schools. If the
Government believes that a national funding formula represents the ideal
system, it should begin the transition soon and be more transparent about
which schools and local authorities could be most affected.”
ENDS
Notes to Editors:
1.
For embargoed copies of the report or other queries, contact:
Emma Hyman or Bonnie Brimstone at IFS: 020 7291 4800, emma_h@ifs.org.uk,
bonnie_b@ifs.org.uk._
2.
The Department for Education has completed two consultations on school
funding reform in England in the past year. The first set out the overall
principles that should guide reform of school funding, emphasising the need for
a simpler and fairer system. The second made specific proposals and sought
views on how a national funding formula for schools should be designed. The
Department is yet to publish its response to the second consultation.
3.
The authors are grateful to the Esmée Fairbairn foundation for funding this
work (grant number 11/0357) and to the Economic and Social Research Council
for providing support through the Centre for Microeconomic Analysis of Public
Policy (grant number RES-544-28-0001).
The Institute for Fiscal Studies
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Registered in England: 954616
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London
WC1E 7AE